IF the Philippine economy attains the government’s economic targets this year and next year, the average per capita income in the country could increase to over $4,000 annually by 2024, according to the National Economic and Development Authority (Neda).
At the Post-State of the Nation Address (SONA) Economic Briefing on Tuesday, Socioeconomic Planning Secretary Arsenio M. Balisacan said attaining a per capita income level of $4,250 or even $4,300 would be possible at the target growth rates.
The national government aims to grow the Philippine economy by 6.5 percent to 7.5 percent this year and 6.5 percent to as high as 8 percent next year. These targets, set by the Development and Budget Coordination Committee (DBCC), were also reiterated by the President in his SONA on Monday.
“At the rate we are growing and assuming that we achieve the 6.5 to 7.5 percent growth this year and the 6.5 to 8 percent next year, we should be reaching that minimum of $4,250 in 2024. By that time, we will become a member of the so-called upper middle income class. That will mean that the size of the economic pie will be bigger,” Balisacan said.
Based on the World Bank’s country classification, the Philippines remains a lower middle income country which has an average per capita income of between $1,086 and $4,255 in 2021. This is based on the 2023 calculations made by the World Bank using the Atlas Method, which also takes into consideration exchange rates.
The same method leads to a per capita income estimate of between $4,256 and $13,205 for upper middle income countries and $13,205 or more for high-income economies.
“That will adjust because of the exchange rate. Atlas method was used to compute that. Of course we will also adjust. But I think we have room to adjust given the low- and high-end estimates for our growth rate,” Balisacan explained to reporters in the vernacular.
Attaining Upper Middle Income Country (UMIC) status has been part of the goals of the previous administration. The country was well on its way to becoming a UMIC under the Duterte administration had it not been for the pandemic.
Balisacan said the impact of the pandemic led to a decline in the country’s economic growth and to per capita income to decline by about 10 percent during the period.
Part of what will help make this possible is the Philippine Development Plan (PDP) which aims to increase quality jobs in the country. By the end of the President’s term in 2028, around 53 to 55 percent of Filipino workers would be wage and salaried workers in the private sector from the 48 percent in 2021.
These jobs, Balisacan told reporters on the sidelines of the economic briefing, will be provided through the government’s efforts to train and retool workers in both the formal and informal sectors.
Quality jobs that could come from sectors such as infrastructure, tourism, manufacturing, and even mining could allow more Filipinos to earn better incomes.
However, Balisacan said, environmental concerns in the mining industry should be addressed before more jobs could be derived from the sector.
“[We have] to be cautious and make sure that the social cost outweighs the benefits and that’s what the President said, we have to preserve our environment not just for us but for the future,” Balisacan said. “It has high potential but of course we have to make sure that it’s not environmentally destructive.”
Balisacan said this is where Public Private Partnerships (PPPs) could be useful. He said the private sector would have greater access to technologies that can be employed in mining without destroying the environment.
Ensuring that mining efforts are sustainable would allow the country to better maximize the possibilities in the sector. Such possibilities include economic growth and jobs for millions of Filipinos.
Based on the Labor Force Survey (LFS) results in May 2022, mining and quarrying employ only 2.3 percent of the country’s workforce engaged in the Industry Sector. The bulk of these workers or 52.6 percent are in Construction and some 42.7 percent are in manufacturing.